Weekly Report - 11 August 2011 (WR-11-32)

MEXICO | Banco de México cuts growth forecast. On 10 August the central bank reacted to the problems in the US economy by cutting its forecast for GDP growth in Mexico from its previous range of 4% to 5% to a range of between 3.8% and 4.8%. The bank said that it was likely that growth in the US would be weak because of the poor position of households, which is reflected in high unemployment and the fragility of the US housing market and the cautiousness of US companies over investment.
The bank also cut its forecast for GDP growth in 2012 to a range of 3.5% to 4.5% from its previous forecast of 3.8% to 4.8%. The bank also forecast that Mexican domestic demand would slow in the second half of this year. The bank said that it had not seen inflationary signs in the second quarter of 2011 and that it expected to see inflation continuing to fall. It is sticking to its inflation forecasts for 2011 and 2012 of 3%, with a one percentage point margin either way.

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